Sello Motseta
7th February 2022
Botswana’s first woman Finance Minister Peggy Serame has delivered her maiden budget speech today emphasizing her determination to restore fiscal sustainability by reducing subventions to state owned enterprises, reducing revenue support to local authorities and combating COVID-19.
Traditionally a large proportion of government spending goes to the recurrent budget mainly to cover wages and salaries, grants and subventions to local authorities and state owned enterprises.
“We will be focusing on the maintenance of public infrastructure, with a proposed total budget of P3billion in the coming financial year. Furthermore, we will be reserving the bulk of maintenance projects for citizen owned companies registered with PPADB. Second, the budget for Constituency Community projects will be reserved for contractors in the immediate locality, in order to provide a focused fiscal stimulus throughout the country,” said Peggy Serame, Minister of Finance and Economic Development in the National Assembly today.
She said, “Despite fiscal constraints we have ensured that the budget allocation for social welfare programmes have been maintained or increased, to protect the most vulnerable members of our population. Fourth, we are providing funding for the development of sporting talent, through a new programme with a budget of P24million.”
With official sources showing minus 8.5% in 2020 and 9.7 % economic growth in 2021 overall growth was zero percent. Unemployment also rose to 26% in the fourth quarter of 2021 owing to COVID-19 causing a huge escalation in the public deficit.
Botswana expects to vaccinate 80% of its population by 26th March 2022 and has achieved this target with first dose vaccinations. The largest share of the total Ministerial recurrent Budget was therefore proposed for Ministry of Health and Wellness operating expenditure to contain the scourge, among other expenses. This includes P2billion specifically for COVID-19, including rolling out vaccines for younger people, booster shots for those already vaccinated and other related expenses.
Botswana will establish a vaccine manufacturing plant to produce advanced COVID-19 vaccines and to address other diseases furthering transfer of advanced biotechnology to Botswana. The integrated resource plan approved in late 2020 dealing with provision of electricity will also facilitate the involvement of independent power producers.
In line with the National payment System vision and strategy 2020-2024 and the shift towards the use of electronic fund transfers and point of sale transactions, the use of cheques in Botswana will be discontinued, effective 1st January 2024.
It was noted that signs of domestic economy’s recovery are reflected in the 13.5% year on year growth in the first three quarters of 2021 with the easing of travel restrictions and the resumption of global trade in diamonds and the implementation of major infrastructure projects.
The Bank of Botswana has maintained the bank rate at 3.75%.
The country’s external account stands at P20.1billion 2020 compared to a deficit of P12.0billion in 2019. Foreign exchange reserves experienced a modest recovery at P60.0 billion in October 2021, an increase of 4.3% from P57.5billion.
Government has revealed its intention to broaden the domestic revenue base by extending the tax net and improving the efficiency of tax collection. It will also reduce resources spent on scare skills allowances, overtimes allowances and tuition and maintenance fees for students in tertiary education.
The Ministry of Health and Wellness enjoys the largest portion of the recurrent budget at P10.01billion (18.7%) with the key message being to save Botswana from COVID-19. The proposed development budget for 2022/2023 financial year is P16.43billion an increase of 12% year on year.
Priority is being given to ongoing projects, refurbishment and maintenance of existing facilities and strategic projects geared towards economic recovery.
Dumelang Saleshando, leader of the Opposition in Parliament, expressed cautious optimism saying “I came here firstly to celebrate the first woman Finance Minister. It sends a good message to other women and a message of hope that they can also rise to the top.”
He said, “She touched on the right structural issues like reducing deficit, delivering export led growth and downsizing government by merging state owned enterprisers or collapsing some of them.”
Saleshando maintained that it however remains unclear where the jobs are going to come from given that Botswana has just come out of a recession.
He noted that Serame needed to avoid pursuing populist policies, failed to allocate more resources to combating gender based violence and did not provide any funding for the transformation of the informal sector which was largely dominated by women.
